IMF approves $4.5 billion for Russia

Published: Thursday, July 29, 1999

WASHINGTON {AP} The International Monetary Fund approved a $4.5 billion financial package for Russia Wednesday aimed at helping to keep the country afloat through December parliamentary elections and presidential voting scheduled for June 2000.

A total of $640 million would be made available immediately, said an IMF spokeswoman, who spoke on condition of anonymity.

Other installments will be paid out over the next 17 months, she said.

President Boris Yeltsin's special envoy to international financial institutions, Mikhail Zadornov, worked out the final details with the IMF's deputy managing director,Stanley Fischer, and the 24-member executive board during a daylong meeting.

The long-awaited deal would allow Russia to stave off a complete international default and to gain access to new loans from the World Bank and Japan. For its part, the IMF gets to keep some leverage over the policies of its largest debtor. Russia owes the IMF $18 billion.

The move to resume lending comes nearly a year after Russia defaulted on its debts and devalued its currency last Aug 17. The IMF froze a loan package worth $22.6 billion after the financial collapse but reached a preliminary accord on new financing in April.

Since then, there have been visits by IMF teams to Moscow, briefings for board members and an independent audit of Russia's finances, so the result of Wednesday's deliberations were seen by many at the IMF as a foregone conclusion.

But there has been some criticism of new IMF lending to Moscow in Congress and elsewhere. House Majority Leader Dick Armey, R-Texas, one of the IMF's most vocal critics, said last week the United States should withhold support for further IMF lending until Russia has accounted for use of past aid. The United States is the IMF's largest contributor.

The new loan was being made contingent on Russian parliamentary approval of a package of laws intended to increase government revenue, combat corruption and restructure the commercial banking system.

The IMF decision is expected to unlock $3 billion in World Bank and Japanese loans and consideration of an accord to restructure debts owed to rich creditor governments. They meet in Paris on Thursday to discuss rescheduling of up to $10 billion of Russia's debt.